Abstract:

The aim of this piece of research is to analyse how inflation erodes the income tax systems, and how that may change its distributional properties. We further investigate the effects of the 2003 tax reform. Although the Spanish government claimed that this reform would reduce tax liabilities, many argue that this reform only offsets the effects of inflation suffered by the population since 1999. Using the European Community Household Panel (ECHP) data set we aim to shed some light on the above issues through microsimulation techniques. Furthermore, we also measure the inequality effects caused by the lack of inflation adjustment in the Spanish income tax.

Reference:

Fuenmayor, A.; Granell, R.; Higón, F.J.; Sanchis, J.A. (2008): Los efectos de la inflación sobre la desigualdad en el IRPF español, Estudios de Economía Aplicada, 26(3), pp. 1-26. DOI: https://doi.org/10.25115/eea.v26i3.5683